By Brandon Martin
City Attorney Eric Monday addressed the Martinsville City Council during their July 28 meeting, following a motion by Council Member Danny Turner to refund money for a real estate transaction that the city made with a resident.
The Martinsville Land Bank Authority, which includes members of Martinsville City Council, made its first property transfer on September 24, 2019, when properties located at 537 and 539 Dillard Street were purchased by Ebony Millner for $7,500.
“I feel so bad. There is a lady that we sold a house to, Ebony Millner, over on Dillard Street and her plight is bad,” Turner said. “I think we did some very bad things in this deal. I would like to make a motion that the city make her whole. Or at least cover the liens that were on the property when we sold it to her.”
Millner, in a previous interview with the Henry County Enterprise, said that she discovered a lien from a previous owner of the property when she attempted to obtain financing for the house.
“They never told me about the previous lien, and I can’t do anything until that lien is taken care of,” she said at the time.
Monday approached the podium during their July 28 meeting to explain the situation and timeline of events surrounding the Land Bank Authority’s transaction.
“It’s an unfortunate situation but I will say at the outset, it is not one that I recommend the city refund her money for,” he said.
Monday said that the two properties were acquired from a Community Development Block Grant and the property on 537 was subsequently demolished due to it being a derelict house.
“That’s now a vacant lot,” he said. “And 539 still has a house that is in need of pretty significant rehabilitation. According to Mr. Kris Bridges and the Community Development Department, Ms. Millner came to us looking for housing options around the city sometime in July or early August of last year. She indicated that she had about $50,000 to put into something. Kris (Bridges) did not bring up the Dillard Street property but he did mention it to the city manager.”
Monday said that Bridges eventually followed up with Millner to suggest that she go look at the property to see if she was interested.
“She indicated, shortly thereafter, that she was,” Monday said, adding that part of the agreement was that “she would need to rehab the property within a certain period of time and that it would have to be owner-occupied.”
He said she indicated her interest and submitted a proposal on Sept. 18. The transfer was approved by the city council on Sept. 24, 2019.
“She paid in cash and the reason that it was $7,500 was that it would cover the demo cost that we had at 537 (Dillard Street),” Monday said. “There were some delinquency issues on 539 (Dillard Street) and so that made the taxpayers whole for what the public investment had been with those two properties.”
Monday said that Millner paid the $7,500 on Oct. 11 and recorded the deed the same day.
Monday, who prepared the deed, said there was no title examination conducted on the deed and that it did not have a current survey.
“In all residential real estate transactions in the United States, that is the responsibility of the buyer,” he said. “If they want to search the title and get title insurance, it is their responsibility to do so. The deed also has requirements in it for rehabbing the property within 12-months of the transaction and it had to be owner-occupied for 24-months. All of that was written into the deed. The deed was delivered to Ms. Millner. She took it to the clerk’s office and recorded it. I don’t know whether she read it. I certainly hope that she did, and I’m not aware if she had any independent legal counsel of her own.”
Monday said that there is typically a three-day window for all real estate transactions in the United States in which a purchaser can back out of the deal.
“That did not occur,” Monday added. “On Nov. 18, 2019, Ms. Millner contacted the city manager and said she wanted to get out of this and return the property to the city.”
Monday said that City Manager Leon Towarnicki informed Millner of the unlikelihood of this occurring. Monday added that she had contacted the city on other occasions as well for the same reason.
“On Feb. 3, (2020), she contacted the council again, and this time her claims had evolved somewhat,” Monday said. “She mentioned a lien that was previously on the property which had prevented her from obtaining financing.”
Monday said that he has since searched the title for the property and “there was a 2007 Henry County judgment which could have potentially been attached to 539 (Dillard Street). It is my professional opinion that it never did attach.”
He explained that there were two owners of that property at that time. They were married and “the judgment was against one of them,” Monday said. “Under Virginia law, a judgment against one spouse does not become a lien on the property. That’s what a tenancy by the entirety deed is for. Nevertheless, I can see how a title company, had there been a title search conducted and insurance been obtained, that that would potentially be considered a cloud on title.”
A cloud on title is “a claim or dispute about the ownership of or an encumbrance on property.”
Monday said that if Millner had a title examination conducted and obtained title insurance, that the previous lien that was flagged would have been clarified.
“I have since contacted the attorney that obtained that judgment. It essentially took me a telephone call,” Monday said. “He said ‘oh, that judgment was satisfied, and I had forgotten to file a release’ which he is in the process of doing.”
Monday said this means that there is no lien that pre-dated Millner’s purchase of this property.
“In my opinion, it never attached in the first place and, in any event, whatever it did attach to has since been paid off, cleared up and there will be a release on file soon for a clear title,” Monday said.
He said that while this lien would have been clarified, there are eight other judgments attached to the property which in principal total $7,540.38. I have not calculated interest and court costs,” he said, and added those liens were not due to a previous owner.
However, Monday said that all of those judgments pre-dated Millner’s purchase of the property and “attached to the property and became liens when the deed was recorded.
He added that those liens could have also prevented approval of conventional financing to rehab the property.
“Were we to refund the purchase money, that would essentially mean that the taxpayers of the city would be paying $7,500 to satisfy pre-existing, unpaid judgments” that have nothing to do with a previous property owner or the city, Monday said.
On March 12, Monday said he sent a letter to Millner outlining issues with pre-dating judgments and stating that the city would not be refunding her money and would be holding her to the redevelopment and owner-occupancy promise that she committed to when she accepted and recorded the deed.
Monday said Millner again contacted the council about reversing the transaction on July 26.
He added there has been some clean up conducted at the site, but that no significant rehab of the site had been done. He said that Millner has about six months left in which to complete the rehab of the property.
“It’s just my recommendation to the council that to reverse this transaction would set a very unfortunate precedent for all of our real estate transactions because it would be completely different than the way they are typically conducted in the United States,” Monday said. “And it does send a message that if you enter into a rehab/redevelopment agreement with the city and you decide that you don’t want to follow through with it, that we will let you out. I also think that the $7,500 refund, which would simply go to pay off unpaid pre-existing judgments, is also a precedent that we really do not want to be setting.”
Following Monday’s explanation, Turner again made a motion to refund Millner the $7,500 “and do something with the property. If you look at it, it’s not rehab-able. I doubt that it ever was.”
The motion died for lack of a second.
Later, Vice-Mayor Chad Martin said that it is the responsibility of council members to protect city employees.
“I’m starting to realize that, not only are we voted in to protect the citizens, but we are also voted in to protect city employees as well,” Martin said. “It is very frustrating to know that somebody uses a position to go after our city employees. When they have no just cause for it, it is terribly under-handed and I would like to apologize to Eric Monday and Kris (Bridges) because you are not going to get it from the person who did it. It should never happen. It is very, very disheartening to see somebody utilize a position like this to do something like that of that nature. I’m sorry that it happened to you.”